Tables 3-1 through 3-5 present data on transportation's contributions to
the economy through consumption (or the money spent on transportation activity).
The Survey of Current Business (SCB) published by the U.S. Department of Commerce,
Bureau of Economic Analysis (BEA). The SCB is a monthly journal that contains
estimates of U.S. economic activity, including industry contributions to the
Gross Domestic Product (GDP). GDP is defined as the net value of the output
of goods and services produced by labor and property located in the United States.
BEA constructs two complementary measures of GDP-one based on income and the
other on expenditures (product). Together, they represent the National Income
and Product Accounts (NIPA), our nation's principle framework for macroeconomic
estimates. The product side results from the addition of labor, capital, and
taxes for producing output. Consumption derives from household, business, and
government expenditures and net foreign purchases.

Table 3-3 presents transportation's
economic impact in a different form, Gross Domestic Demand (GDD). Also derived
from the national accounts, GDD is the sum of personal consumption, gross private
domestic investment, and government purchases. GDD includes imports, but excludes
exports, thus counting only what is consumed, purchased, or invested in the
United States.

GDP Methodology

The 1960 through 1985 data in table 3-1 are from the November 1993 issue
of the SCB. The 1990 through 1991 data and 1992 through 1996 data are from an
August 1996 and November 1997 SCB issue respectively. The October 1999 issue
introduced a revised methodology for GDP estimates (Yuskavage 1996). This section
describes BEA's methodology for estimating transportation's share of GDP.

BEA's
current-dollar estimates of GDP by industry rely on several sources, including
the Bureau of Labor Statistics (BLS), the Health Care Financing Administration,
and the Internal Revenue Service (IRS). Some of the tables in this chapter report
chained-dollar figures. BEA derived chained dollars by using the Fisher Ideal
Quantity Index to calculate changes between adjacent years (Parker and Triplett
1996; Landerfeld and Parker 1997). Annual changes are then chained to form a
time series that incorporates the effects of relative price and output composition
changes. Please refer to page 142 of the August 1996 issue of the Survey of
Current Business for the mathematical formulas (Yuskavage 1996). This method
produced separate estimates of gross output and intermediate inputs for a sector's
GDP calculation. BEA updated the reference year for the chained-dollar estimates
from 1992 to 1996.

Transportation GDP in chained dollars was estimated using
the double-deflation method, which relies on a chain-type quantity index formula,
and requires gross output and intermediate input information. Principal source
data for the transportation categories include: 1) operating revenues of air
carriers and Federal Express from the U.S. Department of Transportation and
public sources (air); 2) operating revenues for Class I motor carriers from
historical records of the Interstate Commerce Commission and Census Bureau annual
surveys (trucking and warehousing); 3) BEA personal consumption expenditures
(PCE), BLS, and trade sources (local and interurban passenger transit); 4) operating
revenues for Class I railroads and Amtrak (rail); and 5) other trade sources
(pipelines).Data sources for water were not provided (Yuskavage, 1996).

Table
3-1 reported current dollar estimates from various SCB issues. BEA derived the
1991 data and subsequent years in four steps:

BEA estimated
1978 through 1981 and 1983 through 1986 input compositions by interpolating
the 1977, 1982, and 1987 figures.

BEA estimates the 1977 through 1987 imported
and domestically imported shares of each detailed input.

BEA estimates the
1988 through 1994 input compositions based on the 1987 figures and the Economic
Censuses of 1992.

For intermediate input estimations, BEA deflates each of the
current-dollar inputs. (BEA deflates import and domestic production separately.)
For deflation, quantities are approximated by real values (expressed at present
with 1996 as the base period) that are calculated by dividing the current-dollar
value of the component by its price index. BEA develops estimates for import
prices with data from a variety of sources, but primarily from the BLS import
price series.

Reliability and Accuracy

BEA views GDP as a reliable measure of output because of the source data
underlying the estimates. The following reliability comments are based on the
Valliant (1993) SCB article and Ritter (2000). GDP data originate from three
types of sources. The foundational data come first from the economic censuses
conducted every five years. These approach complete enumerations of sectoral
activity in state and local governments, manufacturing, services, retail trade,
wholesale trade, construction, transportation, communications and utilities,
mining, finance, insurance, and real estate. Annual estimates form the second
tier of GDP data and emanate form sources such as IRS tax returns and smaller
surveys of establishments. The Annual Retail Trade Survey, for instance, forms
one of the major components of the annual estimates. The U.S. Census Bureau
collects sales and end-of-year inventory data from about 22,000 retail firms
totaling $2 trillion of the $8.8 trillion GDP amount. While considered reliable
by many economists, sampling variability may introduce errors into these annual
estimates. Moreover, the Census Bureau imputes (substitutes estimates for missing
or clearly incorrect data) about 11 percent of reported national annual retail
sales because of accounting inconsistencies or raw survey data errors. The third
component of the GDP flows from quarterly estimates.

In the October 1993 SCB,
Valliant described the reliability and accuracy of the quarterly estimates of
GDP, providing insights into the pre-1985 data in terms of dispersion and bias.
BEA followed a schedule that produced three successive "current" estimates;
advanced, preliminary, and final. BEA analysts developed a dispersion and bias
measure based on the difference between these three estimates.

Dispersion is
the average of the absolute values of the revisions, or, the difference between
P, representing the percentage change in the current estimates, and L representing
the percentage change in the latest available estimates, divided by n, representing
the number of quarterly changes. Bias is the average of the revisions. According
to the October 1993 SCB, dispersion averaged 1.6 percent from 1958 to 63 and
dropped to 1.1 percent for 1968 to 1972. BEA stated that these declines in dispersion
correspond with more accurate initial and final estimates subsequent to the
late 1950s.For years after 1973 until 1991, the BEA concluded that more accurate
source data for preliminary and final estimates did not improve reliability
by much. BEA also determined that bias was not large enough from 1978 to 1991
to be significant under normality assumptions at the five- percent confidence
level. Overall, for the period beginning in 1978 and covering the 1985 data
from table 3-1, the BEA concluded there was no evidence of reliability increases.
BEA also questioned its own estimating procedures and, in particular, the use
of disparate sources of data, which may explain why reliability levels have
not increased.

The NIPA framework also undergoes major updates referred to as
comprehensive, or benchmark revisions. Eleven of these have been completed including
one in 1996 and most recently on October 28, 1999 that provided the data for
tables 3-1 through 3-5.The major change encompassed a definitional change reflecting
our evolving economic system. Software became a business investment rather than
just a "purchased input," or the equivalent of raw material. Unless the company
increased the price of its product to cover software purchases, no impact registered
in the GDP. With this benchmark revision, the Census Bureau increased the 1996
estimate by $115 billion, or 1.5 percent--the amount of software investments
made in that year. Another change involved the Census Bureau's interpretation
of the value of "unpriced" banking services such as ATM (automatic teller machine)
contributions to an establishment's productivity. Previously, banking service
productivity relied only on an index constructed from labor input. Economists
argued that this ignored productivity gains from technological improvements
such as ATMs and electronic banking. The BLS developed a productivity based
instead of bank transactions, and this was used in the 1999 revision. For more
detail, readers should refer to Moulton and Seskin (1999).

Sources of Error for GDP Estimates

The GDP estimates can contain several kinds of error. One source of error
arises from estimates based on preliminary or incomplete tabulations of source
data or BEA judgment in the absence of data. Errors may also arise because of
sampling errors and biases in monthly, quarterly, annual, or periodic tabulations.
Another source of potential error may arise when data are seasonally adjusted.
Readers should refer to the October 1993 SCB issue for more detail (Young 1993).

NIPA and Transportation-Related Final Demand

For table 3-2, transportation-related final demand (TRFD) is from NIPA reported
in the SCB. It represents the sum of all consumer and government expenditures
for transportation purposes, plus the value of goods and services purchased
by business as investment for transportation purposes. Since TRFD includes only
expenditures on the final products of the economy, it is comparable to GDP and
provides a measure of transportation's importance from a consumption perspective.

NIPA tables report the composition of production and the distribution of incomes
earned in production. The totals of these produce a GDP estimate that should
theoretically be equal, but there is always a difference referred to as the
"statistical discrepancy." NIPA is based on four subaccounts of national economic
activity. These include 1) the personal income and outlay account, 2) the gross
savings and investment account, 3) the government receipts and expenditures
account, and 4) the foreign transactions account.

Personal Consumption Expenditures
(PCE) for transportation include 1) road motor vehicles, such as new and used
automobiles, and motorcycles; 2) motor vehicle parts, such as tires, tubes,
accessories; 3) motor fuels and lubricants; and 3) transportation services,
such as repair, greasing, washing, parking, storage, rental, leasing, tolls,
insurance, and purchased local and intercity transportation services. Motor
vehicles used primarily for recreation, boats, noncommercial trailers, and aircraft
are excluded.

Goods and services that are counted as part of
transportation-related exports include 1) civilian aircraft, engines, and parts;
2) road motor vehicles, engines, and parts; 3) passenger fares, including receipts
of U.S. air and ocean/cruise carriers for transporting non-U.S. residents between
the United States and foreign countries or between two foreign points; and 4)
other transportation. The total for road motor vehicles, engines and parts excludes
boats, aircraft, and noncommercial trailers. Other transportation includes 1)
the freight revenues of U.S.-operated ocean, air, and other carriers (e.g.,
rail, pipeline, and Great Lakes shipping) for international transport of U.S.
exports and for transporting foreign freight between foreign points; 2) port
expenditure receipts (representing payments for goods and services purchased
in the United States by foreign-operated carriers); and 3) receipts of U.S.
owners from foreign operators for the charter of vessels and rental of freight
cars and containers.

Goods and services that are counted as part of transportation-related
imports include 1) civilian aircraft, engines, and parts; 2) road motor vehicles,
engines, and parts; 3) passenger fares, including payments to foreign air and
ocean/cruise carriers for the transportation of U.S. residents between the United
States and foreign countries or between two foreign points; and 4) other transportation.
The total for road motor vehicle, engines and parts excludes boats, aircraft,
and non-commercial trailers. Other transportation includes 1) freight revenues
of foreign-operated ocean, air, and other carriers (e.g., rail, pipeline, and
Great Lakes shipping) for international transport of U.S. imports and for the
transportation of foreign freight between foreign points; 2) port expenditure
receipts (representing payments for goods and services purchased in foreign
countries by U.S.-operated carriers); and 3) payments to foreign owners from
U.S. operators for the charter of vessels and rental of freight cars and containers.

Transportation-related government purchases include federal, state, and local
purchases of transportation services, and government expenditures on transportation-related
structures and equipment. Federal, state, and local purchases represent the
sum of consumption expenditures and gross inventory. Defense-related purchases
include expenditures on the transportation of materials (care and movement of
goods by water, rail, truck, and air); the rental of trucks and other transportation
equipment and warehousing fees; and travel of persons (care and movement of
Department of Defense military civilian employees), including tickets for all
modes of travel, per diem, taxi fares, automobile rental, and mileage allowances
for privately owned vehicles.

Further References

This data source and accuracy statement is based on several papers that have
appeared in the SCB. Data users who desire more methodological detail can refer
to the list of references at the end of this chapter.

TABLE 3-6. National Transportation and Economic
Trends

The Statistical Abstract of the United States published by the U.S. Department
of Commerce, Census Bureau, is the source of the population data. The Current
Population Reports are the source of the Abstract's data that are collected
through the Current Population Survey (CPS). This is a monthly survey administered
by the Census Bureau of a scientifically selected sample representative of the
noninstitutional civilian population in 754 areas covering every state and the
District of Columbia. Like other surveys, the CPS is subject to sampling error.
Readers should note that estimates based on the CPS may not agree with census
counts because different procedures are used. Changes in the CPS also mean that
annual comparisons must be made with caution. For instance, in 1994, the CPS
methodology was dramatically changed, and the estimates began to incorporate
1990 census population controls, adjusted for the estimated undercount.

Industrial
production data come from the Industrial Production Index, produced by the Board
of Governors of the Federal Reserve System and published in the Economic Report
of the President. For annual figures, individual industrial production (IP)
indexes are constructed from a variety of sources, including the quinquennial
Censuses of Manufactures and Mineral Industries; the Annual Survey of Manufactures,
prepared by the Census Bureau; the Minerals Yearbook, prepared by the U.S. Department
of the Interior; and publications of the U.S. Department of Energy. The Federal
Reserve Board (FRB) uses these data in a modeling framework to produce estimates
of industrial production. Below are brief discussions on three major sources
for the IP indexes; the survey of manufactures, the census of manufactures,
and the electric utility survey.

Annual Survey of Manufacturers

The Census Bureau conducts a mail survey of approximately 55,000 manufactures
with three different sample strata. The sampling frame is based on previously
surveyed firms and is updated annually based partially on IRS administrative
records and other sources. Large manufactures (shipments > $500 million,
and > 250 employees), some computer manufacturing firms, and all remaining
firms with at least 250 employees are selected. Establishments with employment
generally ranging from 20 to 250 employees are sampled with a probability proportional
to a composite measure of establishment size. Approximately 5,000 of the smallest
firms (5 to 20 employees) are also sampled and receive a shorter survey instrument.
Additional information on the survey, readers should refer
to www.census.gov/econ/www/ma0300.html.

Census of Manufacturers

The Census of Manufactures collects data through mail surveys from approximately
237,000 multiunit and single-unit firms with a minimum payroll figure. This
census is supplemented by IRS administrative data from over 142,000 firms not
contacted by mail. For additional information on the census, readers should
refer to www.census.gov/econ/www/ma0100.html.

Electric Utility Survey

Since 1971, the FRB has conducted the Monthly Survey of Industrial Electricity
Use based on responses from utilities and manufacturing and mining firms that
are cogenerators. This survey is the basis for estimates of the amount of electricity
power used by 120 industrial sectors. More than 40 industrial production series
estimates are based on data from this survey and compose 28 percent of the Industrial
Production Index in 1994 value-added proportions.

Survey responses are voluntary
and are gathered from a panel of 175 utilities and 186 cogenerating companies
with a monthly response rate near 95 percent. In 1992, an additional 71 new
cogenerators joined the panel. This resulted, according to an FRB statistical
analysis, in a decrease of the standard deviation of errors for electricity
growth rates from 3.0 to 1.9 percentage points. Overall, the estimates for total
power use produce a standard error of about 0.5 percentage points. The panel
accounts for approximately 73 percent of industrial electric power use in the
United States.

The Survey of Current Business, published by the U.S. Department
of Commerce, Bureau of Economic Analysis, is the source of GDP estimates. Readers
should refer to the source and accuracy statement for tables 3-1 through 3-5
for information on GDP estimates.

TABLE 3-7. Passenger and Freight Transportation
Expenditures

Detailed information from the source was not available at the time of publication.
Readers should contact the Eno Transportation Foundation, Inc. directly for
information about methodologies and reliability.

TABLE 3-8. Sales Price of Transportation Fuel
to End-Users

The U.S. Department of Energy, Energy Information Administration's (EIA's)
Monthly Energy Review, tables 9.4 and 9.7, provided price data, except for railroad
fuel. Pre-1981 data were reported by the EIA from Bureau of Labor Statistics
reports. Beginning in 1983, the EIA administered a series of surveys to collect
data on petroleum prices, market distribution, supply, and demand. The EIA-782
series encompasses three surveys: 1) Form EIA-782A, Refiners'/Gas Plant Operators'
Monthly Petroleum Product Sales Report; 2) Form EIA-782B, Resellers'/Retailers'
Monthly Petroleum Product Sales Report; and 3) Form EIA-782C, Monthly Report
of Prime Supplier Sales of Petroleum Products Sold for Local Consumption.

EIA
developed a method for comparing data from the new surveys with older information
gathered by various methods. As a result, a number of adjustment factors were
developed and used to "backcast" price estimates. Readers who require a more
detailed description of this methodology should refer to EIA's petroleum data
publications web page
(www.eia.doe.gov/oil gas/petroleum/pet frame.html) and
the explanatory notes section.

Changes in sample elements or collection methods
may affect data continuity. Two regulatory changes affected data collection
in October 1993.The Clean Air Act Amendments of 1990 required that oxygenated
gasoline be sold in the winter months in ozone nonattainment areas. Thus, the
EIA-782 forms were modified to collect information on fuels divided among conventional,
oxygenated, and reformulated categories. Second, requirements for the production
and selling of low-sulfur diesel were required and necessitated the separation
of diesel fuel into high- and low-sulfur categories. Moreover, surveys prior
to October 1993 did not include propane. The EIA followed several different
sampling designs during two periods in the 1980s and thus, there may be some
price estimate discontinuity for periods between December 1983 and January 1984
as well as between August and September of 1988.

Data Collection

The 782 series occurs on a monthly schedule via mail. The 782A and 782C surveys
reflect a census of about 115 and 190 firms, respectively. The 782B samples
about 2,000 firms. The EIA first stratifies by sales volume for the form 782B
survey to ensure that dealers with 5 percent or more of the market are captured
with certainty. The remaining elements of the frame were assigned a probability
of selection to form a 2,200 firm survey. These "noncertainty" companies were
poststratified by geographic area and type of sales category.

Data Reliability

EIA has studied its sampling effects on reliability and determined that the
sample size of 2,000 should yield a less than 1-percent price coefficient of
variation in its estimates. Errors can arise because of nonresponse, but an
EIA official indicated that the response rates for the 1997-1999 782A, B, and
C surveys averaged 95 percent, 86 percent, and 96 percent, respectively. Because
survey data invariably contain incomplete data (because of reporting errors
or nonresponse), EIA estimates or "imputes" missing data. Readers requiring
imputation algorithms should refer to the 782 series explanatory notes referred
to above.

Data in this table were reproduced from the American Petroleum Institute's
(API) Basic Petroleum Data Book. API noted that data reported prior to 1981
was obtained from Platt's Oil Price Handbook and Oilmanac. Platt's is part of
Standard and Poor's, and an independent third party organization that tracks
the petroleum industry. Platt's reported the retail price of gasoline based
on telephone interviews with gas stations in 55 cities. More detailed historical
information on their data collection methods could not be ascertained and the
data's reliability is uncertain. API reported the Bureau of Labor Statistics
(BLS) as its data source for 1981 to 2001 retail gasoline prices. The remainder
of this section discusses the BLS Consumer Price Index (CPI) data collection
and estimation methods used to derive the average retail price of gasoline.

BLS uses the CPI as a measure of average price changes paid by urban consumers
for a fixed basket of goods and services. BLS estimates the CPI with a survey-based
approach. Survey results define a categorization of goods and services, a representative
sample of items to track, and weights according to the consumption of an average
consumer during a base period.

Sample Design

BLS relies on two sampling frames for their CPI estimates. One represents
the universe of retail outlets from which households may purchase defined groups
of commodities and services including gasoline. A second represents households
across urban areas. Moreover, the household frame is based on an "urban-consumer"
population and consists of households in Metropolitan Statistical Areas (MSA's)
and in urban places with more than 2,500 inhabitants. This "all urban" CPI (CPI-U)
provides the estimates for retail gasoline prices shown in table 3-9.Thus, this
frame does not represent non-urban consumers.

For the retail outlet sampling
frame, BLS relies on the Point-of-Purchase Survey (CPOPS) conducted by the Census
Bureau in 94 Primary Sampling Units (PSUs) identified by BLS. PSUs are based
on urban counties, groups of contiguous urban counties, or MSAs. For the household
sample, a noncompact clustering procedure was employed which dispersed households
evenly within a Census enumeration district (ED). More detailed sampling design
information can be found in BLS's Handbook of Methods at
http://stats.bls.gov/opub/hom/homhome.htm.

Prices for the goods and services used to calculate the CPI are collected in
91 PSUs located in 85 urban areas throughout the country. The sample size for
the CPOPS totals about 21,000 retail and service establishments-supermarkets,
department stores, gasoline stations, hospitals, etc. Food, fuels, and a few
other items are priced monthly in all 85 locations. BLS field representatives
collect all price information through visits or telephone calls in the household
surveys. Price changes are computed based on a sample of outlets selected from
locations identified by consumers. Specific sample items are then selected from
each sample outlet to ensure that the market basket is representative of where
households shop.

Estimation

BLS routinely updates its price estimates for specific items among the collection
of goods and services, for example, a new car model year. BLS employs three
techniques to produce new price estimates. First, an item that is directly comparable
to the previous discontinued good will be used to provide a price estimate.
However, a substitute item may be inappropriate when goods change slightly in
their characteristics. BLS relies on Hedonic regression modeling as a second
"quality adjustment" for price estimates. This statistical technique can model
the importance of various quality characteristics that add value to a particular
good (the fiber content and construction of apparel products for instance).
A researcher can estimate a Hedonic regression model that identifies the factors
most important is determining the price of a good, and BLS field representatives
will note these in their data collection. Imputation is a third quality adjustment
used for "noncomparable" substitutions where BLS estimates the price change
from previous averages. Detailed algorithms can be found in chapter 17 of the
BLS Handbook of Methods at
http://stats.bls.gov/opub/hom/homhome.htm.

Effective
January 1999, BLS began using a new formula for calculating the basic components
of the Consumer Price Index for all Urban Consumers (CPI-U) and the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The new formula,
the geometric mean estimator, is used in index categories that comprise approximately
61 percent of total consumer spending represented by the CPI-U. Based on BLS
research, it is expected that use of the new formula will reduce the annual
rate of increase in the CPI by approximately 0.2 percentage point per year.
Additional information on this change was published in the April 1998 CPI Detailed
Report and is available on the Internet at
http://stats.bls.gov/cpihome.htm.

Accuracy

One of the CPI's limitations is that it represents price movements for urban
residents and may not correctly represent nonurban consumption patterns. The
CPI may also contain sampling error because it is estimated from a sample of
consumer purchases. Nonsampling error may occur if respondents provide BLS field
representatives with inaccurate or incomplete information. Another potential
source of error identified by BLS may occur because of a time lag between the
Point-of-Purchase Survey and the initiation of price collection for commodities
and services at resampled outlets. Because of the time lag, the products offered
by the outlet at the time pricing is initiated may not coincide with the set
from which the CPOPS respondents were purchasing.

The CPI is also subject to
response error when data are not collected because of non-response. BLS established
a nonresponse auditing program in 1986.It reported that response rates in 1990
for transportation commodities and services were above 90 percent.

Bias

Four categories of bias were identified in the BLS report, Measurement Issues
in the Consumer Price Index, published in 1997. First, because of the fixed-weight
nature of the index, the CPI creates substitution bias by placing too much weight
on items measured in previous surveys from which consumers may have shifted
away. Second, the study found that the index did not account for consumers switching
to discount stores. Third, a quality change bias was also identified when the
differences between goods priced in two different periods cannot be accurately
measured nor deduced from the accompanying price difference between the goods.
Finally, the report noted that the CPI also had a new product bias because the
index inadequately reflected consumer value of products introduced into the
market. The commission concluded that the CPI overstated the true cost-of-living
change by 1.1 percentage points per year.

TABLE 3-10. Producer Price Indices for Transportation
Services

TABLE 3-11. Producer Price Indices for Transportation
Equipment

Data shown in these tables are drawn from annual issues of The Supplement
to Producer Price Indexes published by the Bureau of Labor Statistics (BLS)
in the U.S. Department of Labor. These indexes represent a measure of outputs
in all goods-producing American industries as well as partial coverage of service
industries including transportation. BLS defines a price as the net revenue
accrued to a specified production establishment from a specified kind of buyer
for a specific product shipped under specific transaction terms on a specified
day of the month. BLS collects this data series through surveys of a sample
of establishments that report their prices from economic transactions.

Data Collection

A BLS field economist visits an establishment or cluster of establishments
selected for price sampling. The economist uses a disaggregation procedure to
select a sample of transactions from all the establishment's revenue-producing
activities. This disaggregation procedure assigns a probability of selection
to each shipping or receipt category proportionate to its value within a reporting
unit. In most cases, the final price index produced by the BLS requires that
1) there are at least three different respondents to a survey, 2) at least two
reporting units provide price information in a given month, and 3) no single
respondent accounts for 50 percent or more of the weight for a given item.

BLS
regional offices review field data for consistency and completeness. The national
office then conducts a final review and a survey is then tailored specifically
to establishments or clusters of establishments. BLS refers to these as repricing
schedules and sends them to reporting establishments on a regular basis. Most
prices refer to a reporting schedule on a particular day of the month, usually,
the first Tuesday or the 13th of a month.

Estimation

BLS collects prices for over 100,000 items. It utilizes several different
weighting schemes for the numerous indexes produced because some products will
have a greater effect on the movement of groupings of individual products. BLS
utilizes the net output of shipment values as weights for the 4-digit SIC industries.
Net output values include only shipments from establishments in one industry
to other industry establishments and, thus, differ from gross shipment values.
The latter would include shipments among establishments in the same industry,
even if those establishments are separate firms. BLS also makes seasonal adjustments
if statistical tests and economic rationale justify them, and computes data
when a participating company does not deliver a price report. BLS bases the
missing price estimation on the average of price changes for similar products
reported by other establishments.

Accuracy

As in all surveys, the accuracy of producer price indexes depends on the
quality of information voluntarily provided by participating establishments.
One of the accuracy concerns of BLS revolves around the preferred use of realistic
transaction prices (including discounts, premiums, rebates, allowances, etc.)
rather than list or book prices. Before BLS fully changed its data collection
method in 1986, a survey indicated that about 20 percent of traditional commodity
indexes were based on list prices. The newer and more systematic methodology
decreased the use of list prices. BLS documentation (available
at http://stats.bls.gov/opub/hom)
provided no more details on sampling error, response rates, or the availability
of generalized variance parameters or techniques for estimating them.

Data used in these tables are from the Bureau of Labor Statistics, Annual
Report of Consumer Expenditure Survey. The Consumer Expenditure Survey (CEX)
collects information from U.S. households and families on their buying habits
(expenditures), income, and consumer characteristics. The strength of the survey
is that it allows data users to relate the expenditures and income of consumers
to the characteristics of those consumers. BLS uses 11 standard characteristics
to classify consumers, including income, before-tax income class, age, size
of the consumer unit, composition of the consumer unit, number of earners, housing
tenure, race, type of area (urban or rural), region, and occupation.

The CEX
is a national probability sample of households. The sampling frame (i.e., the
list from which housing units are chosen) for this survey is generated from
the 1990 census 100-percent detail file, which is augmented by a sample drawn
from new construction permits. Coverage improvement techniques are also utilized
to eliminate recognized deficiencies in the census.

Data Collection

The current survey consists of two separate surveys (Interview and Diary),
each utilizing a different data collection technique and sample. Data is collected
for each survey from approximately 5,000 households. In the Interview survey,
each consumer unit (CU) in the sample is interviewed every three months over
five calendar quarters. The interviewer uses a structured questionnaire to collect
both the demographic and expenditure data in the Interview survey. The interviewer
collects the demographic data in the Diary survey whereas the respondent enters
the expenditure data on the diary form. Both surveys accept proxy responses
from any eligible household member who is at least 16 years old if an adult
is not available after a few attempts to contact that person. The respondent
family completes the Diary (or recordkeeping) survey at home for two consecutive
one-week periods.

A reinterview program for the CEX provides quality control.
The program provides a means of evaluating individual interviewer performance
to determine how well the procedures are being carried out in the field. A member
of the supervisory staff conducts the reinterview. Subsamples of approximately
6 percent of households in the Interview survey and 17 percent in the Diary
survey are reinterviewed on an ongoing basis. A new diary form with more categories
and expanded use of cues for respondents was introduced in 1991, based on results
from earlier field and laboratory studies.

Estimation

Missing or invalid data on demographic or work experience are imputed. No
imputation is done for missing data on expenditures or income. Selected portions
of the Diary data are also adjusted by automated imputation and allocation routines
when respondents report insufficient detail to meet publication requirements.
These procedures are performed annually on the data. The imputation routines
assign qualifying information to data items when there is clear evidence of
invalid nonresponse.

The statistical estimation of the population quantities
of interest, such as the average expenditure on a particular item by a CU or
the total number of CUs in a particular demographic group, is conducted via
a weighting scheme. Each CU included in the survey is assigned a weight that
is interpreted as representing the number of similar families in the universe
of interest, the U.S. civilian noninstitutional population. Readers should refer
to http://stats.bls.gov/opub/hom/homch16 c.htm for the detailed weighting method.

Beginning with 1997 data, BLS introduced a new calibration method to compute
weights in the Consumer Expenditure Survey. The weights are calculated using
a model-assisted, design-based regression estimator.

Accuracy

The Consumer Expenditures Survey is a sample survey and hence is subject
to two types of errors, nonsampling and sampling. Nonsampling errors can be
attributed to many sources, such as differences in the interpretation of questions,
inability or unwillingness of the respondent to provide correct information,
mistakes in recording or coding the data obtained, and other errors of collection,
response, processing, coverage, and estimation for missing data. The full extent
of nonsampling error is unknown. Sampling errors occur because the survey data
are collected from a sample and not from the entire population. Tables with
coefficients of variation and other reliability statistics are available on
request from the national office. However, because the statistics are shown
at the detailed item level, the tables are extensive.

TABLE 3-14. Cost of Owning and Operating an Automobile

Your Driving Costs produced by the American Automobile Association (AAA)
provided the data for this table. Prior to 1985, the cost figures are for a
mid-sized, current model, American car equipped with a variety of standard and
optional accessories. After 1985, the cost figures are for a composite of three
current model American cars:

A 1999 Chevrolet Cavalier LS,

A 1999 Ford
Taurus SEL Deluxe, and

A 1999 Mercury Grand Marquis LS.

Thus, the estimates
are not reliable estimates for all cars.

Fuel costs were based on an average price of $1.195 per gallon of regular
unleaded gasoline, weighted 20 percent full-serve and 80 percent self-serve.
Insurance figures were based on personal use of vehicles driven less than 10
miles to or from work, with no young drivers. Normal depreciation costs were
based on the vehicle's trade-in value at the end of four years or at 60,000
miles. American Automobile Association (AAA) analysis covers vehicles equipped
with standard and optional accessories, including automatic transmission, air
conditioning, power steering, power disc brakes, AM/FM stereo, driver-and passenger
side air bag, anti-lock brakes, cruise control, tilt steering wheel, tinted
glass, emission equipment and rear window defogger.

The U.S. Department of Transportation, Bureau of Transportation Statistics
(BTS), Office of Airline Information, reports passenger fares and operating
revenues in its publication Air Carrier Financial Statistics. These numbers
are based on 100 percent reporting by large certificated air carriers. Minor
errors from nonreporting may occur but amount to less than one percent of all
passenger or freight activity. The figures do not include data for all airlines;
such as most scheduled commuter airlines and all nonscheduled commuter airlines.

Class I Bus

Class I passenger motor carriers are required to report financial and operating
information to BTS using form MP-1.(Prior to 1996, Class I carriers were required
to report to the Interstate Commerce Commission.) Class I passenger motor carriers
are defined as those having annual gross operating revenues, as adjusted for
inflation, of $5,000,000 or more. This table does not include Class I carriers
whose data had not been received at the time of publication. Thus, these data
do not represent total Class I passenger motor carrier activity.

Transit

The American Public Transit Association (APTA) reports these figures, which
are based on the annual National Transit Database (NTD) report published by
the USDOT, Federal Transit Administration (FTA). The legislative requirement
for the NTD is found in Title 49 U.S.C. 5335(a). Transit agencies receiving
funds through the Urbanized Area Formula Program are generally required to report
financial and operating data, including capital expenditures, revenues and expenses.
These data are generally considered accurate because the FTA reviews and validates
information submitted by individual transit agencies. Reliability may vary because
some transit agencies cannot obtain accurate information or misinterpret certain
data definitions. APTA conservatively adjusts FTA data to include transit operators
that do not report to the database (private and very small operators and rural
operators).

Rail

Data are from Railroad Facts published annually by the Association of American
Railroads (AAR). AAR figures are based on 100-percent reporting by all nine
Class I railroads to the Surface Transportation Board (STB) via Schedule 700
of the R1 Annual Report. STB defines Class I railroads as having operating revenues
at or above a threshold indexed to a base of $250 million in 1991 and adjusted
annually in concert with changes in the "Railroad Freight Rate Index" published
by the Bureau of Labor Statistics. In 2000, the adjusted threshold for Class
I railroads was $ 261.9 million. Declassification from Class I status occurs
when a railroad falls below the applicable threshold for three consecutive years.
Although Class I railroads comprise only 1 percent of the number of railroads
in the country, they account for over 71 percent of the industry's mileage operated,
91 percent of total freight rail revenue, and 88 percent of railroad employment.

Intercity/Amtrak

Average passenger fare data are based on 100 percent of issued tickets, and
thus should be accurate. Created as a publicly-owned for-profit corporation,
Amtrak collects its own financial data and reports this information in its annual
report. Auditing should ensure the accuracy of the operating revenue figures.

Trucking and Courier Services (except air)

The Census Bureau's Transportation Annual Survey (formerly known as the Motor
Freight Transportation and Warehousing Survey) is the source of this information.
The sample survey represents all employer firms with one or more establishments
engaged primarily in providing commercial motor freight transportation or public
warehousing services. It excludes motor carriers that operate as auxiliary establishments
to nontransportation companies, as well as independent owner-operators with
no paid employees. Thus, the data do not represent the total trucking industry.

In 1999, Transportation Annual Survey was merged with the Census Bureau's Service
Annual Survey (SAS) and is the source of data for years 1998 and later. SAS
provides estimates of operating revenue of taxable firms and revenue and expenses
of firms exempt from federal income taxes for selected service industries. Unlike
the Transportation Annual Survey, the SAS is based on the North American Industry
Classification System (NAICS).

As with all sample surveys, two types of errors
are possible: sampling and nonsampling. Nonsampling errors may include response
errors and mistakes in coding or keying data. For additional information about
the survey and data reliability, the reader is referred to the Census Bureau
website at www.census.gov.

Water (Domestic)

Eno Transportation Foundation, Inc. is the source of these data. Eno estimates
these figures by multiplying ton-mile figures by estimated revenue per ton-mile.
The U.S. Army Corps of Engineers reports the ton-mile figures in its publication
Waterborne Commerce of the United States, and the revenue per ton-miles figures
are estimated by Eno.

Oil Pipeline

Eno Transportation Foundation, Inc., publishes these data, which are based
on Federal Energy Regulatory Commission (FERC) data and reported by the Oil
Pipeline Research Institute for years 1977 to the present. FERC data originates
from required quarterly reports filed by pipeline companies. Prior to 1977,
the data are based on the former Interstate Commerce Commission data for regulated
pipelines, and estimated to be 16 percent of the total of nonregulated pipelines.

Gas Pipeline

These statistics originate from Gas Facts, published annually by the American
Gas Association (AGA).AGA data are based on gas utilities participation and
reporting to the Uniform Statistical Report and estimates for those companies
not reporting based on recent historical experience. Varying percentages of
nonreporters from year to year introduce minor reliability problems for time-series
comparisons.

Employment data by industry are from the National Employment, Hours, and
Earnings estimates published by the Bureau of Labor Statistics (BLS), U.S. Department
of Labor. These estimates originate from the Current Employment Statistics (CES)
survey program. The CES is a monthly survey conducted by state employment security
agencies in cooperation with the BLS. The survey provides employment, hours,
and earnings estimates based on payroll records of nonfarm business establishments,
including government.

BLS uses a stratified sample based on a sector's employment
size, or the degree of variability among its establishments, or both. This ensures
that BLS captures a more representative survey from employers with large payrolls.
Thus, large establishments are certain of selection while smaller ones have
less of chance.

Data Collection

Data are collected electronically from about two-thirds of the respondents
and by mail or fax from the remainder. The primary type of electronic reporting
is touch-tone phone self-response; others are computer-assisted phone interviews
and phone voice recognition technology. Increasingly, data are collected through
electronic data interchange from a small but growing number of companies that
have a large number of establishments across the country. Mail respondents submit
Form 790 to the BLS each month. It is then edited and returned to the respondent
for use again the following month. All firms with 250 employees or more are
asked to participate in the survey, as well as a sample of smaller firms.

Estimation

Employment estimates are made at what is termed the basic estimating cell
level and aggregated upward to broader levels of industry detail by simple addition.
Basic cells are defined by industry (usually at the 3- or 4-digit SIC level)
and are stratified within industry by geographic region and/or size class in
the majority of cases. Within the wholesale trade, retail trade, and services
divisions, most industries are stratified into three to five size classes (beginning
in 1984).

Most national employment estimates are multiplied by bias adjustment
factors to produce the monthly published estimates. Bias adjustment factors
are used primarily to compensate for the inability to capture the entry of new
firms on a timely basis. New firms contribute a substantial amount to employment
growth each year, but there is a lag between the creation of a firm and its
inclusion on the sample frame (i.e., the Unemployment Insurance universe file).
It is, therefore, necessary to use modeling techniques to capture this segment
of the population. BLS also performs seasonal adjustments for certain SIC industries.

Accuracy

BLS does not publish data reliability information along with estimates. Instead,
it provides estimation formula and the necessary parameters so that users can
estimate standard errors. For additional information, see the "Explanatory Notes
and Estimates of Error" in the BLS monthly publication Employment and Earnings.

The CES survey, which began over 50 years ago, predates the introduction of
probability sampling as the internationally recognized standard for sample surveys.
Instead, a quota sample has been used since its inception. Quota samples are
at risk for potentially significant biases, and recently completed BLS research
suggests that, despite the large CES sample size, employment estimates based
on that sample at times diverge substantially from those that a more representative
sample would have been expected to produce. This leads to an over-reliance on
bias adjustment in the estimation procedure. Because bias adjustment is primarily
based on past experience, it is limited in its ability to accurately reflect
changing economic conditions on a timely basis.

Government Employment

The Office of the Secretary provides employment figures for the U.S. Department
of Transportation. State and local highway department employment figures are
from the State and Local Government Employment and Payroll Estimates, published
by the U.S. Department of Commerce, Bureau of the Census. The data are for the
50 states and the District of Columbia. Employment and payroll data pertain
to the month of October. At present, data are collected for one pay period that
includes October 12 (regardless of the period's length) through the Public Employment
Survey (PES).

Employment refers to all persons gainfully employed by and performing
services for a government. Employees include all persons paid for personal services
performed from all sources of funds, including persons paid from federally funded
programs, paid elected officials, persons in a paid leave status, and persons
paid on a per meeting, annual, semiannual, or quarterly basis. Excluded from
employment statistics are unpaid officials, pensioners, persons whose work is
performed on a fee basis, and contractors and their employees.

The Census Bureau
derives full-time equivalent (FTE) employment by summing the number of full-time
employees reported and converting the number of hours worked by part-time employees
to a full-time equivalent amount. Up until 1985 data, the method used to calculate
FTEs was based solely on payroll data. Effective with 1986 data, the annual
employment survey started collecting data on the number of hours worked by part-time
employees in order to provide a more accurate representation of full-time equivalent
employment. No October 1985 FTE employment data are available.

Beginning in
1999, the Public Employment Survey (PES) was conducted using a separate sample
of approximately 11,000 government units to improve data accuracy and survey
efficiency. Government units meeting any of the following criteria are included
in the survey: 1) counties with populations greater than 100,000; 2) cities
with populations greater than 75,000; 3) townships in New England and Mid-Atlantic
with populations greater than 50,000; 4) special districts with FTEs greater
than 1000; 5) independent school districts with enrollment greater than 10,000;
and 6) all dependent and independent schools providing college level education.
In 1999, government units were sampled to obtain a relative standard error of
3 percent or less for FTE and total payroll for each of the states by type of
government groups.

Prior to 1993, the PES used a joint sample of approximately
24,000 units for both employment and finance. From 1993 to 1998, the sample
size was reduced to around 14,000 units. The standard error for the PES prior
to 1999 was designed to be around 3 percent for major state- or county-level
estimates of finance variables (state-level for 1993-1998 and county-level prior
to 1993).Employment estimates are made using regression, except when the number
of noncertainty cases contributing to the estimate is less than 20, where a
simple unbiased estimate is used.

Employment by detailed transportation occupation data are from the Occupational
Employment Statistics (OES) survey, collected by the Bureau of Labor Statistics
(BLS). The OES is a periodic mail survey of nonfarm establishments that collects
occupational employment data on workers by industry. The OES program surveys
approximately 725,000 establishments in 400 detailed industries. The average
response rate for the last three years, according to a BLS official, averaged
about 70 percent.

The sample is selected primarily from the list of business
establishments reporting to the state unemployment insurance program. The OES
sample initially stratifies the universe of establishments by three-digit industry
code and size- class code. Establishments employing 250 employees or more are
sampled with certainty. Establishments employing fewer than 250 employees but
more than 4 employees are sampled with probability proportional to the size
class employment within each three-digit industry. Establishments employing
four or fewer employees (i.e., size class 1 establishments) are not sampled.
Instead, the employment for these establishments are accounted for by assigning
a larger sampling weight to establishments employing five to nine employees
(i.e., size-class 2 establishments).Within each three-digit industry/size- class
cell, establishments are systematically selected into the sample through a single
random start.

Data Collection

Employers are the source of occupational data. Within establishments, the
main source of occupational data reported by respondents is personnel records.
Data are collected from respondents primarily by mail. Occasionally, visits
are made to large employers and to other respondents who indicate particular
difficulty in completing the questionnaires. Ordinarily, two mailings follow
the initial mailing. After the third mailing, a subsample of the remaining nonrespondents
is drawn and contacted by telephone. The OES survey follows a 3-year cycle.
Three surveys are conducted alternately for manufacturing, nonmanufacturing,
and the balance of nonmanufacturing industries.

Estimation

During the sample selection process, each sampled establishment is assigned
a sampling weight that is equal to the reciprocal of its probability of selection.
For example, if an establishment on the sampling frame had a 1 in 10 chance
of being selected into the sample, then its sampling weight is 10. For establishments
that did not respond to the survey, a nonresponse adjustment factor is calculated
and applied against the sampling weights of the responding establishments within
each state/3-digit industry/size-class cell. Multiplying these adjustment factors
by sampling weights increases the weight of the responding establishments so
they can account for the missing employment data of the nonresponding establishments.

Accuracy

The OES survey uses a subsample replication technique to estimate variances
in occupational employment at the 3-digit industry/size-class level. For additional
information on occupational employment estimates and measurements of sampling
error associated with the estimates, the reader is referred to http://stats.bls.gov/oes/home.htm.

The Survey of Current Business (tables 6.3c and 6.6c) published by the
U.S. Department of Commerce, Bureau of Economic Analysis, is the source of transportation
wage and salary data. These estimates are based on BLS tabulations of employee
wages that are covered by State unemployment insurance. As a component of the
income side of National Income and Product Account, wages and salaries comprise
part of the GDP calculation. These data reflect the monetary remuneration of
employees in terms of wage accruals less disbursements. It is defined as the
difference between wages and salaries on a "when-earned" basis, or accrued,
and wages and salaries on a "when-paid," or disbursed basis. This computation
was instituted in 1992 because a significant portion of bonus payments were
missed in previous calculations. Readers should also refer to the earlier discussion
of GDP methods and reliability for more detail.

For rail, BLS uses freight ton-mile and passenger miles that are collected
by the Surface Transportation Board (STB), the Association of American Railroads
(AAR), and Amtrak. BLS also aggregates four different air transportation outputs
to form a single productivity index: domestic passenger-miles, domestic freight
ton-miles, international passenger-miles, and international freight ton-miles.
Air transportation data come from Air Carrier Traffic Statistics and Air
Carrier Financial Statistics, published by the U.S. Department of Transportation,
Bureau of Transportation Statistics. For petroleum pipeline, BLS relies on data
from the Association of Oil Pipelines and derived an output index based on trunkline
barrel-miles. A barrel-mile is one barrel of petroleum moved through one mile
of pipeline.

Estimation

BLS generally calculates labor productivity by dividing an index of output
(in this case, ton-miles) by an index of hours. Output is derived with a weight
adjusted Tornqvist formula that produces an output ratio for one year. BLS then
combines these in a series that produces a chained output index. The hour indexes
are developed from data in BLS's Current Employment Statistics (CES; see discussion
above for table 3-12) and are the results of dividing the annual aggregate hours
for each year by a base-period figure. Readers who need more detail, such as
mathematical specifications or equations, should refer to Kunze and Jablonski
(Kunze and Jablonski 1998) or call the Office of Productivity and Technology
at BLS.

Accuracy

BLS provides no measures of reliability. However, BLS makes an assumption that
transportation outputs should be measured using the production of passenger-miles
or freight-miles. Another school of thought might assume that many transportation
firms or facilities are actually providing capacity rather than actual use.
Thus, an argument can be made that productivity should be based on capacity
rather than use. In fact, this is how BEA measures transportation output. To
evaluate the BLS assumption, one study compared the two approaches by examining
the different growth rates produced by BLS and BEA and found that in 25 of 35
service industries, the differences are within one percentage point. For transportation,
differences in growth rates across BLS and BEA estimates were two percentage
points or less (Kunze and Jablonski 1998).

Beginning with 1997 data, the indices for bus and petroleum pipelines did not
meet BLS publication standards and are considered less reliable than those for
other modes. These industries had between 14,000 and 15,000 employees, far below
the 50,000-employee threshold established for transportation industries by BLS.
However, they both met a basic test of variability of the annual percent changes
in the output per hour measure.

GOVERNMENT REVENUES AND EXPENDITURES

TABLE 3-25a &3-25b. Federal, State, and Local
Government Transportation-Related Revenues and Expenditures, Fiscal Year (Current
and constant 1996 dollars)

The main sources for federal-level data are the Budget of the United States
Government and the Appendix to the Budget. These data are the actual
figures as reported for the various transportation-related programs in the appendices
of each year's budget document.1 The figures are
consistent from year to year and follow the definitional structure required
by the Office of Management and Budget (OMB).

Primary sources for state and local transportation-related revenues and expenditures
data are censuses and surveys collected by the U.S. Census Bureau. All units
of government are included in the Census of Governments, which is taken at five-year
intervals for years ending in 2 or 7, and these data are full counts, which
are not subject to sampling error.

State and local government data for noncensus years are obtained by annual
surveys, which are subject to sampling error. For U.S. totals of local government
revenues and expenditures in this report, sampling variability is less than
3 percent.

Federal figures in this report correspond to the federal fiscal year, which
begins on October 1, while state and local data are for fiscal years that generally
start in July. While this may create a small error in totals for any given year,
the data are suitable for illustrating trends in public transportation finance.
Programs terminated before 1985 are excluded from the tables. The totals for
transportation revenues and expenditures in this report are the sum of the Census
Bureau's state and local numbers plus the total of the federal numbers.

The source of the chained dollar deflators is The National Income and Product
Account Tables, Bureau of Economic Analysis, table 7.1, "Quantity and Price
Indexes for Gross Domestic Product." All inflation-adjusted data are for the
base year 1996, instead of 1992 as in previous editions of National Transportation
Statistics. Note that deflators used for the federal data differ from those
used for state and local data. Thus, if expenditures are totaled across different
levels of government in chained dollars before and after federal grant transfers,
the totals will not match.

Transportation Revenues

Transportation revenue estimates include transportation-related user charges,
taxes, or fees earmarked for transportation-related expenditures. Estimates
include transit fares from systems owned and operated by state and local governments,
including those systems operated under contract by a private firm under day-to-day
financial oversight by government.

Federal transportation revenues generally consist of trust-fund collections
from user charges, such as fuel taxes, vehicle taxes, registration and licensing
fees, and air passenger ticket taxes. Damage payments made by private parties
are deposited in the funds to reimburse the government for related fund expenditures.

The five transportation-related Federal trust funds are established by law:

Highway Trust Fund (HTF), which includes both highway and transit accounts;

Airport and Airway Trust Fund (AATF);

Harbor Maintenance Trust Fund (HMTF);

Inland Waterways Trust Fund (IWATF); and

Oil Spill Liability Trust Fund (OSLTF).

Highway Revenues

The Highway Trust Fund (HTF) was established by the Highway Revenue Act of
1956. Highway Trust Fund revenues are derived from various excise taxes on highways
users (e.g., motor fuel, motor vehicles, tires, and parts and accessories for
trucks and buses) and interest earned on balances. The Transportation Equity
Act for the 21st Century (TEA-21), which was enacted in June 1998,
made important changes to the Federal Highway Trust Fund legislations (FHWA,
1999):

extension of deposit provisions of almost all highway user taxes through
September 30, 2005;

after September 30, 1998, the HTF can no longer earn interest on balances,
and the balance in the highway account would be transferred to the general
fund;

TEA-21 keys Federal-aid highway funds to receipts of the Highway Account
of the HTF; and

the Transit Account share of fuel tax rose from 2 cents per gallon to
2.86 cents per gallon.

The Excise tax on gasoline is the most important source of the HTF revenues
and has changed five times since 1985. It increased from 9 cents per gallon
in 1985 to 9.1 cents per gallon on January 1, 1987; to 14.1 cents per gallon
on December 1, 1990; to 18.4 cents per gallon on October 1, 1993; to 18.3 cents
per gallon on January 1, 1996; and to 18.4 cents per gallon on October 1, 1997
(FHWA, 1999).

Money paid into the fund is earmarked primarily for the Federal-aid Highway
program, which is apportioned to states for planning, constructing, and improving
the nation's highway system, roads, and bridges. Effective April 1983, the Highway
Revenue Act of 1982 created the Mass Transit Account within the HTF.

Some portion of the HTF is dedicated to budget deficit reduction and the Leaking
Underground Storage Tank Trust Fund (LUSTTF). For example, 4.3 cents per gallon
of the federal excise tax on gasoline has been assigned to the general fund
since January 1, 1996, and 0.1 cents per gallon was apportioned to the LUSTTF
since October 1, 1997 (FHWA, 1999). These funds are not considered as transportation-related
in this report.

State and local highway revenues include state and local taxes on motor fuels,
motor vehicle licenses, and motor vehicle operator licenses, along with state
and local charges for regular toll highways and local parking charges. Regular
highway charges (revenues) include reimbursements for street construction and
repairs, fees for curb cuts and special traffic signs, and maintenance assessments
for street lighting, snow removal, and other highway or street services unrelated
to toll facilities. Local governments use special assessments and property taxes
that may be commingled with other local revenue in a general fund to finance
local road and street programs. Consistent with federal revenues, state and
local transportation revenues in this report do not include general funds that
may be allocated to transportation.

Transit Revenues

As mentioned above, the Highway Revenue Act of 1982 created the Mass Transit
Account within the HTF. Effective April 1983, the act provided one cent per
gallon of the federal excise tax on gasoline sales to be set-aside for the Mass
Transit Account to help finance transit capital projects. The rate was increased
to 1.5 cents per gallon on December 1, 1990; to 2 cents per gallon on January
1, 1996; and to 2.86 cents per gallon on October 1, 1997 (FHWA, 1999). Although
highway users pay these taxes, the funds are treated as federal transit revenues.

State and local transit revenues include revenues from operations of public
mass transportation systems (rapid transit, subway, bus, railway, and commuter
rail services), such as fares, charter fees, advertising income, and other operations
revenues. They exclude subsidies from other governments to support either operations
or capital projects.

Air Revenues

The Tax Equity and Fiscal Responsibility Act of 1982, as amended by Omnibus
Budget Reconciliation Acts of 1990 and 1993, the Small Business Job Protection
Act of 1996, and the Taxpayers Relief Act of 1997, provides for the transfer
of receipts received in the U.S. Treasury from the passenger ticket tax and
certain other taxes paid by airport and airway users to the Airport and Airways
Trust Fund (AATF). Effective October 1, 1997, the Taxpayers Relief Act of 1997
extends aviation excise taxes for 10 years and includes the following major
provisions (FAA, 1999):

retains existing freight weigh bill, general aviation fuel and gas taxes,
and a 6-dollar departure tax on domestic flights to and from Alaska and
Hawaii;

converts the 10 percent ad valorem tax on domestic passenger tickets to
a combination of ad valorem and flight segment tax over three years beginning
October 1, 1997;

imposes a new 7.5 percent tax on payments to airlines for frequent flyer
and similar awards by banks and credit card companies, merchants, frequent
flyer program partners-other airlines, hotels, or rental car companies and
other businesses;

increases the current 6-dollar international departure tax to 12 dollars
per passenger and adds a 12-dollar international arrival tax;

lowers tax rates on flights to certain rural airports to 7.5 percent without
a flight segment component; and

transfers revenues from the 4.3 cents-per-gallon aviation fuel taxes currently
dedicated to reduce the national U.S. deficit from the general fund to the
AATF.

Most of this trust fund is used to finance the Federal Aviation Administration's
(FAA's) capital programs, namely, Facilities and Equipment; Research, Engineering,
and Development; and Airport Improvement Program. Within certain limits set
by Congress, some of the remaining money is used to cover FAA operation and
maintenance expenses. The portion of the FAA's operation and Maintenance expenses
not paid from the trust fund revenues are financed by U.S. Treasury general
funds.

State and local revenues from air transportation are derived from airport charges.
Beginning in 1992, local governments began collecting passenger facility charges
and spending these revenues (both subject to FAA approval) to finance capital
programs.

The collection of passenger facility charges was authorized by the Aviation
Safety and Capacity Expansion Act of 1990.2

The Harbor Maintenance Trust Fund was established in accordance with the Harbor
Maintenance Revenue Act of 1986. Revenues for this fund are derived from receipts
of a 0.125 percent ad valorem user fee imposed on commercial users of specified
U.S. ports, Saint Lawrence Seaway tolls. On March 31, 1998, per a U.S. Supreme
Court ruling, the tax on exports was terminated (OMB, 2000). This fund is used
to finance up to 100 percent of the U.S. Army Corps of Engineers' harbor operation
and maintenance (O&M) costs, including O&M costs associated with Great
Lakes navigational projects, and the fund fully finances the operation and maintenance
of the Saint Lawrence Seaway Development Corp.

The Inland Waterways Trust Fund was established by the Inland Waterways Revenue
Act of 1978 and amended by the Water Resources Development Act of 1986. The
trust fund has been in effect since fiscal year 1981. The sources for the fund
are taxes imposed on fuel for vessels engaged in commercial waterway transportation
and investment interest. From this tax of 24.3 cents per gallon, 4.3 cents goes
for deficit reduction, and a statutory maximum of 20 cents (raised to that level
from the previous maximum of 19 cents at the beginning of 1995) goes to the
Trust Fund. The funds are earmarked for financing one-half of the construction
and rehabilitation costs of specified inland waterway projects.

The Oil Spill Liability Trust Fund was established by the Omnibus Budget Reconciliation
Act of 1989. Revenues for this fund are raised through tax collection of 5 cents
on each barrel of oil produced domestically or imported (OMB, 1999). The resources
from this fund are used to finance oil pollution prevention and cleanup activities
by various federal agencies. For the U.S. Coast Guard, the fund finances oil
spill recovery and payment of claims. Beginning in 1997, the fund also finances
the annual disbursement to the Prince William Sound Oil Spill Recovery Institute.

The Panama Canal Commission was established by the Panama Canal Act of 1979
to manage, operate, and maintain the Panama Canal under the Panama Canal Treaty
of 1977. The treaty period ended on December 31, 1999, when the Republic of
Panama assumed full responsibility for the canal. During the treaty period,
the commission collected tolls and other revenues, which were deposited in the
U.S. Treasury in an account known as the Panama Canal Revolving Fund. Money
from this fund was used to finance canal operations and capital programs, which
were reviewed annually by Congress. The revenues reported under this category
for FY 2000 are for the first quarter (October 1999 - December 1999) of Panama
Canal operations.

State and local water revenues are derived from canal tolls, rents from leases,
concession rents, and other charges for use of commercial or industrial water
transport and port terminal facilities and related services. Fees and rents
related to water facilities provided for recreational purposes, such as marina
and public docks, and toll ferries are not included.

Rail Revenues

There are no governmental transportation revenues for rail (Rail generates
fuel taxes that are designated for deficit reduction and, thus, are not considered
transportation revenues in these tables).

Pipeline Revenues

The Pipeline Safety Program is funded by user fees assessed on a per-mile
basis. The assessments are made on each pipeline operator regulated by the Office
of Pipeline Safety (OPS) of the Research and Special Programs Administration
(RSPA) in the U.S. Department of Transportation. There are no state and local
revenues for pipeline.

General Support Revenues

General support revenues come from the Emergency
Preparedness Fund, which is generated from fees paid by registered shippers
of hazardous materials. RSPA administers and distributes the revenues to states,
territories, and tribes through the Hazardous Materials Emergency Preparedness
(HMEP) grant program, which is authorized by Federal Hazardous Materials Transportation
Law.

Transportation Expenditures

Expenditures, rather than obligations, are used
in these tables because they represent the final, actual costs to the government,
by year, for capital goods and operating services required by transportation
programs. Obligations suggest government commitment to future transportation
expenditures, but do not indicate when the funds will actually be disbursed
or even if the amounts obligated will be spent.

It is important to recognize that in some accounts
in the Budget of the United States Government, expenditures for a particular
year understate total government disbursements. This is because certain offsetting
collections of fees and assessments from the public are not treated as government
revenues, but deducted from disbursements to determine expenditures. These collections
are those mandated, by statute, to directly fund agency expenditures rather
than be transferred to the U.S. Treasury. For this reason, expenditures do not
necessarily indicate how much the federal government actually spends on transportation
each year.

Highway Expenditures

Federal Highway Administration (FHWA) expenditures
include funds for Federal Aid Highways (financed from the HTF) and the Interstate
Substitution and Railroad Crossing Demonstration (financed from the general
fund). The National Highway Traffic Safety Administration (NHTSA) expenditures
include: operations, research, and highway traffic safety grants. Federal highway
expenditures also include road construction activities managed by the Department
of the Interior's National Park Service, Bureau of Indian Affairs, Bureau of
Reclamation, and Bureau of Land Management; the Department of Agriculture's
Forest Service; the Department of Housing and Urban Development; and other federal
agencies.

State and local governments' highway expenditures reported by the Census Bureau
are generally slightly lower than those reported in FHWA's Highway Statistics
because the FHWA includes some highway expenditure data, such as law enforcement
activities and patrols, and policing of streets and highways not included in
the Census data. Box 3-1 outlines the major differences in Census Bureau and
FHWA calculation of state and local highway transportation financial statistics.

Transit Expenditures

Federal expenditures include grants to states and local agencies for the
construction, acquisition, and improvement of mass transportation facilities
and equipment and for the payment of operating expenses. Several other items
are also included: Federal Railroad Administration (FRA) commuter rail subsidies
related to the transition of Conrail to the private sector; research and administrative
expenses of the Federal Transit Administration (FTA); and Federal interest payment
contribution to the Washington Metropolitan Area Transportation Authority (WMATA).

Air Expenditures

Federal expenditures reported here consist of all FAA expenditures, such as
those associated with constructing, operating, and maintaining the national
air traffic system; administration of the airport grant program; safety regulation;
and research and development. NASA expenses related to air transportation are
also included.

State and local expenditures for air include the operation and maintenance
of airport facilities, as administered by local airport and port authorities
quasigovernment agencies with responsibilities for promoting safe navigation
and operations for air modes.

Waterway and Marine Expenditures

Federal expenditures comprise those parts of the U.S. Coast Guard's expenses
that are transportation-related, such as aids to navigation, marine safety,
and marine environmental protection. All expenses of the U.S. Maritime Administration
are included, such as subsidies for construction and operation of vessels by
U.S.-flag operators, research and development, and training of ship officers.
Also included are those expenses of the U.S. Army Corps of Engineers for construction
and operations and maintenance of channels, harbors, locks and dams; protection
of navigation; the salaries and expenses of the Federal Maritime Commission;
and the expenses of the Panama Canal Commission. Expenditures of the Panama
Canal Commission for FY 2000 include outlays for the first quarter of operations,
including severance pay and accumulated leave. FY 2001 expenses are for the
settlement of remaining accident and contract claims against the Commission.

State and local governments incur water transportation expenditures by operating
and maintaining water terminal facilities within ports and harbors.

Rail Expenditures

Federal rail transportation expenditures include:

expenses for rail safety enforcement;

inspection and program administration;

railroad research and development;

financial assistance to states for planning, acquisition, rail facility
construction, and track rehabilitation with respect to low volume freight
lines;

grants to Amtrak, including funds to upgrade the high-speed line between
Boston, Massachusetts, and Washington, DC, owned by Amtrak (the Northeast
Corridor Improvement Program); annual appropriations to cover operating
losses; and funds to invest in new equipment and facilities;

the purchase of redeemable preference shares for track rehabilitation
and line acquisition; and

The local rail freight assistance program, a program of FRA grants to state
governments, has had a 70:30 percent federal-state funding share since 1982.

Pipeline Expenditures

The Office of Pipeline Safety (OPS) reimburses state agencies up to 50 percent
of their costs to carry out state pipeline safety programs. Federal expenditures
are for the enforcement programs, research and development, and grants for state
pipeline safety programs.

General Support Expenditures

General fund expenditures include all of the expenses of the following agencies:
Office of Inspector General, National Transportation Safety Board, all expenses
of the Research and Special Programs Administration, (except pipeline expenditures)
and the Office of the Secretary of Transportation (except for payments to Air
Carriers and the Commission on Aircraft Safety).

Limitations of the Source Data
Sets

The database covers civilian transportation-related activities of government
agencies including those of the U.S. Army Corps of Engineers and U.S. Coast
Guard.

As mention earlier, federal government data are compiled for the federal fiscal
year, which begins on October 1, while state and local data are for fiscal years
that generally start in July except for four states with other starting
dates (Alabama and Michigan in October, New York in April, and Texas in September).
While this may create a small error in totals for any given year, the data are
suitable for illustrating trends in public transportation finance.

Readers should note that state and local governments data for census years
are full counts and not subject to sampling errors, whereas the data for noncensus
years are estimated from annual surveys of the Bureau of the Census, which are
subject to sampling variability of less than three percent. The Census Bureau's
database also does not include detailed modal information on interest earnings
and bond issue proceeds on the revenue side nor bond retirement and interest
payments on the expenditure side

Revenues

Transportation-related revenues like local government property taxes on vehicles,
equipment, and streets, and state income taxes to support rail and intercity
bus services are not covered because they are not shown in the source materials
used to compile the database. In addition, taxes collected from users of the
transportation system that go into the general fund are not included. For example,
rail generates fuel taxes that are designated for deficit reduction and hence
are not considered as transportation revenues. The portion of the Highway Trust
Fund (HTF) that goes to the general fund is not considered as transportation
revenues.

Expenditures

It is important to recognize that in some accounts
in the Budget of the United States Government, expenditures for a particular
year understate total government disbursements. This is because certain offsetting
collections of fees and assessments from the public are not treated as government
revenues, but deducted from disbursements to determine expenditures. These collections
are those mandated, by statute, to be applied directly to finance agency expenditures
rather than being transferred to the Treasury.

In addition, the Census Bureau's highway expenditures
data do not include highway law enforcement expenditures, which form a part
of the state and local highway expenditures published in the Highway Statistics.
To maintain consistency between the different modes regarding the types of expenditures
included, these additional data from the Highway Statistics report have
not been used.

Data Adjustments

Revisions and corrections to previously published data have been made in
most cases. The base year for chained dollar estimates for current data sets
is 1996, while the earlier version was presented in chained 1992 dollars. Moreover,
the following adjustments have been incorporated.

Revenues

Transportation-related revenues of the Aquatic Resources Fund have been added
to water transportation revenues. In this case, only the excise tax charged
on motor boat fuels for the Boat Safety Program is assumed to be transportation-related.

The preceding data series did not account for revenues of Pollution Fund, Off-Shore
Oil Pollution Fund, and Deep Water Port Liability Fund prior to FY 1990. The
current data sets includes revenues for these funds prior to FY 1990.

Expenditures

Not all expenditures for the U.S. Coast Guard (USCG), as reported by the Office
of Management and Budget, are considered transportation-related. A new approach
has been used to arrive at more accurate USCG transportation-related expenditures.
Similar to the previous approach, the current approach includes all expenditures
for Environmental Compliance and Restoration, Alteration of Bridges, and Oil
Spill Recovery. Part of the expenditures for Operations, Acquisition, Construction
and Improvement, Research & Development, and Test and Evaluation are considered
as transportation. Within these program areas, only Aids to Navigation, Marine
Safety, and Marine Environmental Protection activities are included in the earlier
data sets. In the current version, more activities like Search and Rescue and
Ice Operations have been included. In addition, Boat Safety Program expenditures
have also been included.

Trust fund share of pipeline safety was added to the Research and Special Programs
Administration expenditures since FY 1994. This item was not covered in the
previously published data.

Federal Grants

Federal grants to state and local governments for the Boat Safety Program have
been included. These were not included in the previously reported data.

Data for federal transit grants are obtained from the Office of Management
and Budget public budget database. In the previous data series, they were estimated
by deducting direct federal transit expenditures grants from the total federal
transit expenditures.

REFERENCES

Korn, E.L. and B.I. Graubard.1991."A Note on the Large Sample Properties of
Linearization, Jackknife and Balanced Repeated Replication Methods for Stratified
Samples." The Annals of Statistics 19 (4):2275-2279.

1 The federal budget is broken down into 20 functional categories, of which one
is transportation (function 400). Function 400 is not tied to any one department
or agency, but instead aggregates transportation functions wherever in the federal
government they occur. Thus, the transportation function may include many activities,
such as highway construction and safety, airways and airports, maritime subsidies,
U.S. Coast Guard operations, railroads, and mass transit. It also covers grants-in-aid
programs to support state and local activities. A good summary of the federal
budget process can be found in Stanley E. Collender, The Guide to the Federal
Budget, Fiscal Year 1996 (Washington, DC: Urban Institute Press. 1995).

2
Public Law 101-508, 104 Stat. 1388 (November 5, 1990).

3 Funds in the Conrail Labor Protection Program were provided
for benefits to Conrail employees deprived of employment because of work
force reductions and other actions. This program no longer exists since
Conrail has been returned to the private sector. In 1988, the unobligated
balances available from this program were transferred to the USCG, and in
1990 they were returned to the U.S. Treasury.